What is a postal pyramid scheme?

Answer 1

THE PYRAMID SCHEME The chain letter pyramid scheme uses a list of names, usually 5 or 6, and the recipient is told to send $1 (or more) to the person at the top of the list. The person sends out copies of the list, but removes the top name that has received his money, and adds his own name to the bottom position (everybody above moves up one spot). When the list has been circulated through 5 more generations, each person receiving it will be sending this person $1 (his name moving up one space in each new level of letters). This will (supposedly) be a huge windfall in return for the initial cost of $1 plus mailing costs. The system overlooks two fallacies. One, that there would have to be an unlimited supply of new participants, all faithfully following the plan. Two, that if everyone continued to participate indefinitely, eventually each person would have to give back all the money as he received as future requests from others on the list. (And all the costs of copying and mailing would have been wasted.) As a "get rich" scheme, this would only benefit those closest to the start of the list. It is also illegal under US law.

Answer 2

A postal pyramid scheme is a fraudulent business model where participants are promised high returns for recruiting others to join and invest in a mailing list. The scheme relies on constant recruitment of new members to sustain the earnings of those at the top, while those at the bottom of the pyramid struggle to make any money. Eventually, as recruitment slows down, the scheme collapses, leaving the majority of participants with financial losses.